I think we've been consistent on this point. We expect for there to be fewer positions in the now housing organization than there are positions currently within the constellation of housing organizations. Our commitment to City Council and the employees who came here is that we would 78 5/28/02 - FINANCE - BILL 020275, RES. 020285 absorb people who are no longer employed within the housing constellation into other positions in government. And that's still our commitment.
And how would that be accomplished considering the fact that most of the positions in government are Civil Service?
I didn't say all, I said it's a fair statement that most of the positions in government are Civil Service.
That's one of the issues that we're going to be working through, but our commitment remains the same, that we will not be putting people out on the street as a result of this housing reorganization.
And no one's suggesting that people be put out on the street, but when the government is too big to begin with and our goal is to streamline and tell people that we're streamlining agencies when in the end we're really not streamlining much. We may be streamlining a part of the process, but we're not 79 5/28/02 - FINANCE - BILL 020275, RES. 020285 streamlining the cost to the taxpayer, whether that taxpayer be a federal, state, or City taxpayer; is that accurate?
I think that there will not be -- there will still be costs associated with the people who will be retained within government. When I think back about other examples, I think about the closing of the nursing home or the transfer of operation of the nursing home. And at that time when that happened, the commitment was made that people would be absorbed within government; and that, in fact, did happen. I see this as being a similar kind of commitment. I think you appropriately identified some of the challenges associated with that.
Well, in all fairness, not too long ago the Administration was claiming that they were going to laying off police and fire fighters as a result of -- but that didn't seem to be too much of a concern as opposed to finding new places for people in these agencies to land, so --
I think that the -- 80 5/28/02 - FINANCE - BILL 020275, RES. 020285 well, I'm not going to argue.
Okay. Let me ask you about the process dealing with CDCs and other grants and loans that are awarded periodically throughout this process. What is the process to determine and to quantify the effectiveness of the CDC, what they accomplish, what they don't accomplish, what their mission is? Are they required to come and explain what they're intending to accomplish with the money given in that particular year? And then is there a follow-up to see whether or not that in fact happened? Same thing with grants and loans that may be given for various economic or residential development operations. How do we figure out who's doing what for what money and whether or not they're effective? MS. McCOLLOCH: I'll speak to the housing portion of that. In the case of housing development, we put out a request for proposals and CDCs respond to that request for proposals by 81 5/28/02 - FINANCE - BILL 020275, RES. 020285 submitting a proposal for whatever the development project is it's suggesting. That proposal is evaluated. One of the --
By whom? I'm sorry. By whom? MS. McCOLLOCH: There's an interagency team Proposal Review Committee composed of people from the Redevelopment Authority, the Office of Housing, Community Development, the Planning Commission. The proposals are reviewed. Part of that review is to review the past experience of the CDC, has the CDC performed well on past projects and so forth.
What are the criteria for that evaluation? What are the areas that they look at? MS. McCOLLOCH: I'm sorry, I have two people talking to me at the same time. I beg your pardon. What are the criteria?
For a CDC, for example, what are the general areas of evaluation that take place as a result of determining whether or not to continue to fund an organization or to eliminate -- and by the way, 82 5/28/02 - FINANCE - BILL 020275, RES. 020285 has anyone's funding ever been eliminated or reduced? MS. McCOLLOCH: Both of those things have happened, funding has been eliminated or funding has been reduced. The reduction usually occurs if the CDC can't acquire or can't produce the number of houses that it said it was going to. We'll just stop where it is or we won't fully fund whatever was originally proposed
Is that in all cases? In all cases where CDCs do not meet their benchmark or their projection on production, their funding is either eliminated or reduced? MS. McCOLLOCH: Generally, it happens if the CDC is not able to acquire the number of houses that it initially proposed that it would do. So a CDC may have said "We want funding to support the rehabilitation of 15 properties," but before it could get to settlement, either it couldn't acquire all of those, one of them was too severely deteriorated, one of them was demolished, whatever happened. So the number of properties is reduced and then the funding is reduced that goes along with that. 83 5/28/02 - FINANCE - BILL 020275, RES. 020285
How often does that happen? What percentage of -- MS. McCOLLOCH: It doesn't happen very often, but it does happen.
Does it happen that they don't reach goal or that their funding's not reduced? MS. McCOLLOCH: It doesn't happen often that they don't -- it doesn't happen often that the funding is reduced to the number of CDCs.
Okay. What's the percentage of CDCs that are able to meet their goals, stated does? The question is, does every CDC that doesn't meet their goals have their funding reduced or is it on a case -- MS. McCOLLOCH: No, every CDC does not have its funding reduced and every CDC is not -- funding is not eliminated to every CDC. In general, once a project has been accepted, the project manager at the Redevelopment Authority works with that CDC to work through whatever the issues are that are preventing the CDC from 84 5/28/02 - FINANCE - BILL 020275, RES. 020285 moving forward with its project. Obviously, the best thing in world is to have a CDC that is very capable, has all of its properties, is ready to go and everyone thinks it's swell. That doesn't always happen. We have a commitment to the neighborhood and to the project and so we work with the CDC to work through whatever the issues are.
How many cases per year do you deal with in that regard? MS. McCOLLOCH: How many projects a year?
Yes, how many CDC projects a year that have been funded in the prior year that you have to review and determine whether or not they, in fact, hit their market or they didn't? MS. McCOLLOCH: We have an ongoing relationship with the CDCs.
Is it done annually? MS. McCOLLOCH: Well, the work for the CDCs is ongoing so, yes, it's continual.
So how many times 85 5/28/02 - FINANCE - BILL 020275, RES. 020285 a year do you have to all sit down and figure out, you know, is this organization meeting its goals, can it meet its goals and should we continue to fund it at the level funding it at? MS. McCOLLOCH: Well, meet internally with the Redevelopment Authority and OHCD. We have monthly status meetings regarding the status of projects. And at those meetings, if there was a recommendation from staff to eliminate or reduce funding, then we would analyze that.
And how often does that happen? MS. McCOLLOCH: That there's a recommendation to eliminate?
A recommendation from staff to do that. MS. McCOLLOCH: Not very often. None, last year.
Could you give me a little insight, Mjenzi, on the commercial side?
Councilman, the process is very similar for Economic Development except that the review of proposals is done by staff at the Commerce Department. In other words, we have 86 5/28/02 - FINANCE - BILL 020275, RES. 020285 a Review Committee made up of staff people who review proposals that come in. Prior to this Administration, we put in process -- it used to be that we had yearly submission dates for proposals, and we eliminated that. So proposals can now come into you us at any time. And one of the primary reasons that we did that was because very often if proposals -- if projects are not fulfilled, then it means that dollars are available that others could come in and apply for. So that's why we felt it would be more beneficial to the communities to have an open process. We depend mostly on our program monitors to determine whether or not funding should continue or be cut off. And this is done basically by the measurements that they make on the scope of services that are contained in the contract.
And the main criteria is job creation? That's the projected -- I mean, projected number of jobs created is, from your testimony, I think, on the 108 loans, but I assume on all loans and grants, 87 5/28/02 - FINANCE - BILL 020275, RES. 020285 it's job creation that's the issue.
Job creation and also the kinds of projects that will bring benefits, i.e., goods and services to low- and moderate-income residents.
And what is the process to quantify or to determine whether or not those benchmarks, those goals have been hit or met, similar to my line of questioning with the CDCs?
We require that specific numbers be reported back to us from -- let's say, for instance, we're talking about loan programs, from PCDC and from PIDC. And these reports are available if you --
Do we have any idea what numbers of jobs that were created through this process over the last year or two?
Well, there is one report that I'm familiar with that PIDC has prepared. We can at least deal with those numbers, and then, if you will, Bob Fina, Senior Vice President is here.
Thank you. 88 5/28/02 - FINANCE - BILL 020275, RES. 020285 (Witness comes forward.)
My name is Robert Fina. I am Senior Vice President of the Philadelphia Industrial Development Corporation, generally known as PIDC. PIDC tracks jobs for all 28 of our loan programs. Most of those loan programs are funded through the federal government but also through the state government, the City and even the regional authority here in the area.
So you're monitoring contractor for the City's economic -- the City's Commerce Department?
For every loan program that we administer, Councilman, yes. When I have information going back to 19 -- excuse me. Information going back to April 1, 1978 through 12/31/01 for CDBG-funded programs, as well as I have that information by Council District and also I have that information by Council District for all the loan programs that we administer. 89 5/28/02 - FINANCE - BILL 020275, RES. 020285
And how many jobs were created during that period of time? I know you weren't prepared to answer this so...
During that period of time, in CDBG-funded, the number of jobs created were 13,817 jobs.
How do we determine who receives those jobs? Do we track the demographics of those individuals who are employed as a result of that investment?
The raw numbers, fine. It's just kind of how does that 13,000 impact Philadelphia neighborhoods? How do we determine where these people are coming from, whether they come from high unemployment areas, whether they're all in the City? I mean, how do we --
It's a fair question but a the difficult one to respond to, Councilman. We track by total jobs and low-income jobs for CDBG-funded programs. We track also by the types of jobs that are created. 90 5/28/02 - FINANCE - BILL 020275, RES. 020285
Give us some of the categories of the types of jobs that are created.
There will be clerical worker, there will be unskilled. In the hotel, an example, unskilled worker, so we'll know those type of jobs, Councilman.
But we do have the demographic information available, or we don't?
Is there a way to obtain that? I assume that people who have obtained the loan report back as to the number of jobs created. Is there some way that that can be verified as far as both the actual number and where these people happen to live or what they were doing before they were employed, whether they were employed at all?
I certainly assume that that information can be requested, Councilman. I'm not sure whether it's legal to demand that 91 5/28/02 - FINANCE - BILL 020275, RES. 020285 information be provided from the employee. They have certain constitutional rights that we'd have to be careful that we don't violate.
On construction projects that, for example, that we've dealt with here, we receive ongoing information from, I think, Urban Affairs Coalition on the number of jobs, basically the zip codes of where the people live. So it's not -- and they're being asked for from private employers like Philadelphia Eagles, so it's not they don't seem to mind providing it. I'm just wondering why --
Councilman, I agree. We certainly request that information and we may have requested it. I don't have a job reporting form with me so I can't tell you exactly what it is. I'll certainly supply that to you what we use. And certainly we could expand that and request for more information.
Thank you. I appreciate that. Madam Chair, I may not get back around again. My only concern relative to the approval of the $65 million we're going to spend, with all due 92 5/28/02 - FINANCE - BILL 020275, RES. 020285 respect to the witnesses, I basically have three and a half pages of information and would really like to have a little bit more than we've been given relative to finally approving the expenditure of these funds. I know that staff has attended and there's been some briefings that staff attended, but the information that's been provided to me through staff is not that sufficient. And I think three and a half pages on a $65 million approval seems to be a little bit lacking. So I would suggest that we try to research a little bit more information and see what we can get.
We've submitted the program statement, which is the big book. I also brought extra copies with me today in the event, you know, Councilmembers didn't bring their copies with them. I think Darwin has them.
They've been reviewed by staff. I still -- from this particular Councilperson's perspective, I think there's additional information that needs to be forthcoming prior to this approval, just for my position on this record. Thank you
Certainly, 93 5/28/02 - FINANCE - BILL 020275, RES. 020285 we have tried to meet with everybody in this regard. If there are -- are you referring, Councilman, to the questions you just raised?
Those questions and others. Basically issues relative to the agency streamline, the demolitions, what targeted neighborhoods? I mean, just what's going to happen, because I think a lot of people in this room have some concern over what's going to happen, when it's going to happen. And if we don't as their elected officials know it exactly, I can't expect that they would know it.
Well, we have tried to be available to everyone for weeks ever since this was advertised which is the reason why there was such a long period of time between the announcement of the hearing and actual hearing. If you would submit your questions, we'll try to have them answered.
You can submit them to me and I'll make sure they get them. But it is our goal -- as you know, we 94 5/28/02 - FINANCE - BILL 020275, RES. 020285 recess on the 13th. It is our goal to try to report this bill out of committee, both aspects of it, CDBG and NTI. That is why spent so much time trying to talk with every office and solicit their questions so we could get responses. Certainly, all questions, we ask you get to the Chair and we will certainly make sure that they are distributed to all Members of the Committee. But at this point, we are not recommending that we hold up these hearings unless -- obviously, we will go with the majority of the Committee, but it is not our goal to hold up the whole CDBG Block Grant as well as NTI.
That's not my suggestion on the CDBG Block Grant. I voted -- this will be the 11th one I voted on. I still don't understand what it does, but I'll still vote for that one. It's the $65 million in the bond proceeds that I have concern about. And that's my concerned, and it may be reported out of this Committee and that may be the case. But I wanted the record to be clear that there's still questions I think need to be answered.
Thank you, 95 5/28/02 - FINANCE - BILL 020275, RES. 020285 Councilman. We'll be glad to receive them. Councilman, are you finished with your questions?
Councilwoman Tasco? Does anyone else have questions before Councilwoman Tasco gets to her second go-around? Councilman Nutter?
I wanted to get back to the Basic Systems Repair Program and the PHIL loan Program. It states that you're going to increase the PHIL loan program to $2 million. A number of -- I must say that last year was the first time I've ever heard of the PHIL loan Program. A lot of people in the community are not aware of that program. How do you adjust the program to meet the needs of a number of people who probably might not qualify for a loan to take away the grant money, which really people need? We have a lot of working poor in this City, and they live in communities where they're trying to 96 5/28/02 - FINANCE - BILL 020275, RES. 020285 maintain their home and these are some of the people who have fallen prey to the predatory lenders. How do you restructure or are you going to restructure the PHIL Loan Program to accommodate those people who have less-than-perfect credit?
There is, I think, three basic strategies that we are putting in place. One, with respect to the PHIL Loan Program, one of the most significant changes as a result of the refunding of that bond issue, adding some NTI dollars and the Community Development Block Grant dollars, we will be writing down interest rates that have historically been at 9.6 and I think percent to two tiers; 3 percent and 5 percent. We believe because of lower interest rate, that can, again, become -- can reach a broader audience if in terms of the income that would be required to support that interest rate. Second, you're right the PHIL Loan Program is a Title insurance program and the person still has to have fairly good credit. What we would like to do is to begin to do more grant and loan assistance programs, in part to 97 5/28/02 - FINANCE - BILL 020275, RES. 020285 try to get out some of the issues raised by Council President Verna. An example of a grant loan assistance program, which leverage private dollars, which is a key principle of NTI is something like it's your turn. We do have a proposal before us. We haven't had an opportunity to review it, to look at beginning to replicate that concept into other neighborhoods. That was a grant and loan program, and the grant component was far more flexible than just the traditional Basic System Repair Program. I think the thing to remember about our first use in NTI is that we do have to put in place the program delivery and the details of the specific program and the operational components of that. Another thing that's happening is a part of the PHIL Loan Program, which was raised, I think, by Council on several occasions is the marketing component. And I'm proud to announce that the Redevelopment Authority's been working with, I believe it's PNC Bank's marketing department. Sometimes we're not very good at coming up with market. We're going to start 98 5/28/02 - FINANCE - BILL 020275, RES. 020285 placing ads in newspapers. They've been working on developing some of those ads for us as opposed to just sending out information in flyers so, again, we can reach more people. And then we're going to identify and try to find resources to do even paid media campaigns, so we plan to be much more aggressive on marketing. One of the things I should note is that the 5 percent home improvement loan will not carry any income restriction. Before it was a 9 percent. That's very competitive and we think can reach, as we said, a very broad audience. And then the third major strategy --
The 3 percent is up to 115 percent which, for -- I think it's in the back of the book. That's a fairly -- I think it goes up to about 75,000 for a family of 4. We'll check the numbers. I know we have it in there for 120. But we also have been talking about, again, to do a targeting grant loan assistance program that we may even look at a 3 percent loan without income restrictions. Those are some of 99 5/28/02 - FINANCE - BILL 020275, RES. 020285 the principles that we've set forth in the program description. It's still the challenge of operationalizing is getting banks on board, and Herb Wetzel at the Redevelopment Authority and his staff has been leading that work. The third part which I think is really very important is the development of what we call a subprime loan product or anti-predatory loan product. How do we make resources available for individuals who do have income but for a variety of reasons, may not have A credit, maybe because of a divorce or something that happened in their personal history and lives. We received and had been approached by a number of individuals who are interested in working with the City in developing such a product with the lending institutions. What we did for Fiscal Year '03 is allocating resources so that we can develop a loan product in partnership with the private sector, because I really think lending institutions really have to be at the table with such a product and enough resources to do a pilot initiative in '03 so we can begin to get a sense 100 5/28/02 - FINANCE - BILL 020275, RES. 020285 of the demand and the need, so coming up with the demonstration piece. We're very much committed to crafting the City's role. Is it a loan guarantee role or if it's some other role, that type of detail still needs to be worked out. It's my hope to work over the summer to craft an RFP to issue out to, you know, the various people interested in this issues to come forth with suggested proposals. We also think such a proposal should really speak to how this is marketed and other support services and tied into the City's other anti-predatory lending work. As you know, we significantly with block grant dollars beefed up our anti-predatory counseling that we're doing. We're doing training. We received a designation as a Freddie Mac Don't Borrow Trouble Campaign. We'll be funding a hotline and a dedicated staff attorney to help address issues around predatory lending.
What would be the difference in the $750,000 you have in the budget for anti-predatory loans and the PHIL Loan Program? 101 5/28/02 - FINANCE - BILL 020275, RES. 020285
Well, the PHIL Loan is in a long-standing -- I believe it's been in operation for about years at least. So we 5 have a really good sense of the demand that have 6 program. We do anticipate greater demand with 7 the lower interest rates. So we have a history 8 there. What we don't have in place is, you know, 9 it takes time to create a program, to make sure 10 it's operational to get the lending institutions 11 involved as service providers and then we want to 12 have a -- 13
I'll have Herb Wetzel 16 talk in detail about how the PHIL Loan Program 17 operates. We do not run it directly. We 18 actually work -- 19
Good afternoon, good afternoon. My name is Herbert Wetzel, I'm Executive Director of the Philadelphia 102 5/28/02 - FINANCE - BILL 020275, RES. 020285 Redevelopment Authority. The PHIL Loan Program was created in 1982, and it operates under the following premises: The Redevelopment Authority issues bonds, private-activity bonds to raise the money to purchase -- to purchase these loans that are originated by private banks. Obviously, at the beginning of the program, there were banks that were involved 11 because that was a time when we had the GSBs and 12 the other banks that just no any longer exist 13 here in Philadelphia as a result of mergers and 14 acquisitions. We're down to three banks right 15 now that originate these loans, PNC; we're 16 negotiating with Citizens Bank because they took 17 over the melon operations; and we're working with 18 Fleet Bank at this point in time. What. Happens is, in order to sell the bonds and raise the money to purchase these loans, there has to be security for the bondholders and what has become security for the bondholders is the FHA insurance. We sign an agreement with the bank that if the loan goes 103 5/28/02 - FINANCE - BILL 020275, RES. 020285 bad, the bank has to buy the loan back from us. So when they originate the loan, we purchase it from the bank, we hold it; and if it goes bad, the bank has to repurchase the loan. The only way the banks have been willing to participate in that kind of lending program is if it's an FHA insured program. In other words, they have to have an insurance policy backing up the loan that they make under the PHIL Loan program. The unfortunate side of that is what comes along with the FHA insurance is FHA underwriting guidelines, and those guidelines are more restrictive on someone's credits than a bank might be willing to do on its own. So what the banks operate under is essentially they are underwriting these loans under FHA guidelines and they have to meet those guidelines. I think what Pat is talking about is working with banks and others to create a product outside of that framework because of the limitations on this. And just to go back to it, why FHA? It is the security that the bondholders receive 104 5/28/02 - FINANCE - BILL 020275, RES. 020285 when we sell the bonds. They know we're buying these mortgages, they know they're insured, and it keeps our bond rating much lower. But I think with a we want to do is look for a way to create a product that competes with the subprime lenders. That means if you've got one or two nicks on your credit report, you shouldn't be knocked out of a program. And I think that's what we want to focus on over the next six months, to figure out how we create a subprime product to compete with the subprime lenders that are doing predatory lending.
Well, we pulled the banks together. Of course, during course of predatory lending discussion, they offered to find a way to offer products to consumers that would keep them away from the predatory lenders. They have coming together under the auspices of the Greater Philadelphia Urban Affairs Coalition to put together a program to provide these products. And we're interested in seeing that that project, since they have offered it, there's a mechanism, they have some history with the PHIL Loan program, that we pursue that. And I 105 5/28/02 - FINANCE - BILL 020275, RES. 020285 understand Pat's concern that she wants to put an RFP out, but who else would respond other than the banks? I don't want to see some of these subprime lenders who were preying on our citizens all of a sudden think that they've cleaned up their act and come in and say, "Well, we now qualify to run these programs, involved with these programs.
We've been working with the Urban Affairs Coalition. We've had several meetings with them. We're continuing to pursue that avenue. I would say that PNC is one of the leading entities in here. I think Citizen Bank wants to show itself as a new player in town as someone who's sensitive to these issues. I think we have a real opportunity to move forward in this areas with the responses that we're receiving from the banks. And I think what we want to do is think of ways to, you know, expand the pie in this particular case. You know, we have a couple of banks, and the ones you mentioned are interested, but we want to make sure we have enough product out there to meet the demands. 106 5/28/02 - FINANCE - BILL 020275, RES. 020285 And just one last comment is that PHIL Loan this year topped $60 million in lending since its inception and many of these loans have been paid off because our outstanding loans is only $11 million, so has produced $60 million worth of lending and many of those loans have been paid off. In a number of cases people, have borrowed PHIL Loans two or three times. They borrowed 33,000 to fix the roof, 3500 maybe five years later to put a new heater in. It's real interesting that some people are borrowing like 2 or 3,000, pay it off, and then make another improvement on their house. And I think the fact that we've lowered the interest rate to persons up to 115 percent of median bodes very well in the areas where you may want to -- we're competing with suburban product in some cases. And so if a Realtor can say, you know, If you buy this house, I know you don't like the kitchen or the bathroom, but if you buy this house in Philadelphia, you have enough income to be able to borrow money to modernize the kitchen and bath at 3 percent interest rate. I think it's a really great product that will help us and our 107 5/28/02 - FINANCE - BILL 020275, RES. 020285 Realtors compete with the suburban market.
Well, Have the banks come up with a product yet that they have put up on the table? It's still in the discussion stage?
So What would the $750,000 buy that's in this budget?
Once we get a specific proposal with a loan product, I wanted to use that to fund a demonstration project to get something rolling so we would have resource approved by City Council to get a demonstration product and program up and running.
To kick off the product if they come up with something like that?
Suppose the program requires more. Is there flexibility in the budget to provide additional dollars?
What we would do, we'd come back to City Council with a recommendation to expand the program. We'll have the detail, you know, greater detail on the product. Under the ordinance that was passed by City Council, any changes to the budget mid-year has to be approved by City Council by resolution. So the Administration would come back to Council, submit a resolution and say -- to seek the increase in the amount, you know, to specify the terms and conditions under which the program would operate, particularly for the ones that are in the design stage.
Well, it seems to me that the prime banks, PNC being the lead bank and all of the other banks you mentioned, Sovereign, they're all at the table. I'm very concerned that we look at other sub-prime lenders that have been the preyers, and I really don't want to see them involved in this process at all. (Applause.) 109 5/28/02 - FINANCE - BILL 020275, RES. 020285
I think the question might be, does one bank want to come by itself and create its own product or do the banks want to create a consortium and submit a product. And we get different, you know, expression of interest. There are some who are interested in doing something and maybe going it alone. There are others who may want to do a consortium or maybe would have both. For example, even in the PHIL Loan Program, there's different approaches that each one of the banks want to take with respect to that. And I thought this could be a process which kind of clearly helps us to line up apples to apples or oranges to oranges so that we would know.
Thank you. The Chair had to leave the table for a moment. The Chair recognizes Councilman 110 5/28/02 - FINANCE - BILL 020275, RES. 020285 Nutter.
Thank you, Madam Chair. I just have some preliminary questions that I'd like to ask and then some more detailed questions to follow. First, what are the benchmarks of success for both NTI Program and the CDBG program at this point?
In the Five-Year Plan that was included in the NTI component of the Five-Year Financial Plan, we talk about specific production goals related NTI and that we, of course, have talked about.
One for the Fiscal Year '03, we specifically speak to '03. But for overarching, we talk about that over a five-year, you know, that period that we've taken care of, you know, all of the dangerous buildings which is currently about 7500 and anticipating that so many buildings become dangerous each year. So one outcome would be, you know, we haven't gotten haste curb in terms of the elimination of 111 5/28/02 - FINANCE - BILL 020275, RES. 020285 dangerous buildings. We talk about the stabilization of properties and the acquisition in getting those properties back onto private market, and there we set a production goal of, I believe, about 2500 over five years, The first year being approximately 350 in terms of specific vacant property stabilizations. We've talked about either directly or facilitating, you know, the creation of 1600 housing units or rehabbed improved units of housing broken out between preservation investments. And this is some of the language that was originally included in what call our five-year action plan.
Let me make sure we're working from the base of knowledge. Clearly, you know more about this than I do. Are you talking about in the larger document; is that what you're talking about? Five-year estimated summary NTI Program budget?
That's the program budget. When I was talking about the five-year overarching production goals, it goes back to what we call the NTI strategic action plan, you know, the strategy for growth and investment that 112 5/28/02 - FINANCE - BILL 020275, RES. 020285 we shared with City Council as part of --
I can make that available. It's a 15-page document. It's available on the Website for the City at this point in time, and we talk about those overarching objectives over five years. This document then speaks in detail as to Fiscal Year '03's production goals and objectives.
I think I understand that, and clearly, you've laid out what things you expect to takes place. I mean, is that -- if do you those things, is that then the definition of success for the NTI Program and the CDBG Program?
I think we're trying to accomplish using the NTI resources, as we call it predevelopment funds, to accomplish, you know, changing not only the physical look of our 113 5/28/02 - FINANCE - BILL 020275, RES. 020285 neighborhoods because of the -- and eliminating those dangerous and blighting condition, but also beginning to prevent the encroachment of blight into more healthy and stable neighborhoods. So success for me will be to eliminate those blighting conditions and preventing the encroachment of blight as well as beginning to attract new resources into neighborhoods for a variety of activities.
Now, what is it that we're going to do that's going to help prevents future blight?
Well, again, as you know, particularly when we talk about blight elimination, we focus NTI on four aspects of physical blight, dangerous buildings, we focused on debris-filled lots, we focussed on abandoned cars, graffiti, and then we also talk about things that impact the quality of life in neighborhoods. So looking at those conditions, I think an example of success was not only removing, you know, the large number of backlog of abandoned cars off the streets in a short period of time, but then making sure that 114 5/28/02 - FINANCE - BILL 020275, RES. 020285 government had realigned itself and it continues to take abandoned cars off in a reasonable period of time. To me, success will also be not only during the initial cleanup of those lots, but beginning to assemble the land and market that and causing redevelopment. And to the extent that there is an immediate redevelopment opportunity, that we begin to engage residents in this government's partnership around, you know, interim uses for that land.
Well, let me ask this question. And, I mean, this is certainly not for an esoteric or even a lofty discussion. Do you think that we've -- let's go back to the abandoned car example which everyone agrees, and I certainly agree, was a significant start to turning things around in the City. Now, have we eliminated the abandoned car problem or have we just changed the system to allow to us get the cars off the street sooner?
A lot of issues that confront, I think, our neighborhoods, you know, what we might call the root causes also involve 115 5/28/02 - FINANCE - BILL 020275, RES. 020285 other things outside of the City's immediate control. I mean, I understand with abandoned cars, it may be the high cost of insurance and people, you know, buying disposable cars and things of that nature. And some may argue that if you do not address the root cause, you know, are you getting at the problem? But I think when we look at -- maybe to the health sector, I mean, I think it's acknowledged that sometimes when you have a disease that may not at this point be curable that it is prudent and appropriates to address the symptoms and to keep the patient, to the extent possible, free of pain while you work towards a cure. So I think a lot of our issues, you know, we talk about NTI being a long-term vision. We talk about the fact that what we see in our neighborhoods represent what I say is a changed economy and some very, you know, fundamental things going on. Some things which, you know, government can, you know, position itself to address, other things which city government alone cannot do, you need the resources of the federal government or the state government, but also the 116 5/28/02 - FINANCE - BILL 020275, RES. 020285 private sector. You know, things, as I think Councilman Cohen mentioned when he talked about the supermarkets. It's not only government that can drive that decision about where supermarket relocates, it's also a business decision. So, again, NTI, we have characterized as a predevelopment strategy, as a strategy to ready ourselves so that we are more competitive in terms of our neighborhoods and communities.
I don't want to belabor the point, but I would like to go back to the first or more recent question. What I have asked is, have we solved the abandoned car problem or did we develop a system that allows us to respond to it quicker and get the cars off the street? There is a difference in how you determine what your success is.
Now, are people abandoning cars at the same rate? Are people going to abandon their homes at the same rate and are we just respond to the abandonment quicker; or are we, in fact, going to actually prevent it? That's my question. You can use either example 117 5/28/02 - FINANCE - BILL 020275, RES. 020285 in terms of your response.
Right now I cannot say unequivocally that we have solved the root causes of what makes lead people to abandon cars.
You know we have not solved the root cause of what may lead to abandonment in neighborhoods and vacancy in neighborhoods.
So we are addressing the symptoms of that cause. I think, though, it's important to address the symptoms because if you don't do that, it tends to get worse and spiral out of control.
There others who -- and that's not my focus, who are looking at some of the root cause issues around some of our issues when it comes to abandonment is increasingly becoming an issue that's on national agendas, you know for the think tanks and policy people and a lot of people are looking to Philadelphia and 118 5/28/02 - FINANCE - BILL 020275, RES. 020285 seeing the type of work that we're doing as groundbreaking.
And I understand that and I appreciate that. But as you well know, kind of here on the ground, we also don't really have the opportunity to spend much time in the think tank world. So now I'm going to ask you about abandoned properties. What is it that we're going to do to stem the flow or the activity in terms of abandonment? What is it in the program that's going to cause that to slow down or possibly eliminate it.
I think there's a couple of things in terms of our program. For example, looking at trying to get a hold of a property before, you know, like, it deteriorates to the point, you know, stabilizing that property, getting title and getting it back into a productive homeowner's hand. That doesn't stop -- you know, a lot of times abandonment may be due to the death of a person and its tangled titles, that type of thing.
I understand. How long does it take to acquire a property now? 119 5/28/02 - FINANCE - BILL 020275, RES. 020285
If it's inside an urban renewal area, between nine and twelve months. If it's an Act 94 --
If it's an Act 94, it's somewhere in that same timetable, but the problems we have had, as I've testified before on Act 94 is, it has to be under the current law vacant and we can start the condemnation process and then go around and find out somebody's occupying it maybe even illegally, but they're occupying it. We have to stop.
Now, you use Act 94 in the non-urban renewal area; is that what you're doing?
Around nine to twelve months from the date it is funded till the property is available for reuse. 120 5/28/02 - FINANCE - BILL 020275, RES. 020285
It all depends if the money -- I mean, one of the good things with NTI is we actually have the funding in place to move forward on these, and I think that's a dramatic change and a very positive change that if you look at this budget, there's $11 million for allocated for acquisitions. And I think that makes a big difference. So when the decision is made to acquire, we can immediately move on it. The last one the City has relied on sheriff's sale as a means of acquiring properties, but that has been two, three, four years in the making sometimes. I'm sure you all have constituents who have asked for a vacant lot through the sheriff's sale system. And I think what we're very, very clear on is that the State has given under the redevelopment laws of this state tremendous power to eliminate blight in urban renewal areas and in some cases we're going to have to expand them to use that power in order to eliminate blight. It is the swiftest, surest methodology of gaining title to properties. 121 5/28/02 - FINANCE - BILL 020275, RES. 020285
Urban renewal. Strictly urban renewal within an urban renewal area. There are issues with Act 94. We've got a legislative proposal in Harrisburg to both streamline it and minimize the issues that have been problematic with Act 94.
It was sent over to the Governor's Office for review and comment. It's both in the House and Senate Urban Affairs Committee and tentatively there was to be hearings scheduled June 3rd on it. I cannot confirm whether that is still on or not at this point in time.
Do you know the bill numbers of those respective bills?
I will find out whether they've been assigned. I will get them for you.
Now, what happens in areas that don't have the urban renewal designation? And in many instances some of those neighborhoods probably will not have an urban 122 5/28/02 - FINANCE - BILL 020275, RES. 020285 renewal designation. What are you going to do in those neighborhoods?
We'll continue to use Act 94. And I think one of the things, if we can get this legislative change, it will probably knock two months off of the process. Under the current Act 94, it requires the Department of Licenses and Inspections to cite the property as a public nuisance, to issue notices to the owners, the owners have a cure period, they also have a right to appeal to an L&I Review Board. That all stretches it out. I think one of the legislative changes that we've asked for is, A, a definition of abandonment which is essentially if has a vacant lot and has a demolition lien on it, it has therefore been abandon by the owner. Or if the municipal liens exceed the fair-market value by 150 percent, it is effectively economically obsolete and therefore abandon. Under that change, it would not require any involvement of L&I. It would require the certification by the Revenue Department of the particular liens that are on the property, verification of that certification by the 123 5/28/02 - FINANCE - BILL 020275, RES. 020285 Planning Commission, a VPRC vote, and we could proceed to condemn a property, saving the relatively 60 days plus that the L&I process takes right now.
Mr. Wetzel, including your time as -- you were Deputy Director before coming Director; is that correct?
How long have you been talking about these proposed changes in state legislation?
I think I've been talking about them since I came to the Redevelopment Authority.
1993. But I think it was this Administration that essentially said, Let's move agenda forward, let's put the full force of the Administration behind this and get it done. I was talking about them because I was on the other end of the system in which trying to do developments where some properties would come from sheriff's sale, some from VPRC, 124 5/28/02 - FINANCE - BILL 020275, RES. 020285 some from Act 94. It was a very difficult process, and so having been on the receiving end of it have made me an advocate inside the Administration, but it wasn't on the radar of the previous Administration, but it certainly is on the radar of this Administration and I feel very good about the support I've gotten to move this legislation forward.
And the particular legislation you're talking about, how long has that been up in Harrisburg?
It's been up in Harrisburg I think latter part of December. We've worked with State Representative Bill 16 Keller who's been a real champion of this, and the City's lobbyists and Bill Keller have worked very diligently to move that ahead this spring.
Miss Smith, when do you expect development or revitalization to start in the various neighborhoods?
I think each neighborhood, you know, vary from place to place, and it would depend upon the type of redevelopment activity or preservation activity 125 5/28/02 - FINANCE - BILL 020275, RES. 020285 that's contemplated. For example, you know, we think once we have much more land in place, we will be in a better position to proactively market larger parcels for redevelopment to interested private parties.
Where are some of these large parcels that you plan to assemble?
I think if you looked in the notebook or as we talked about before, I think the highest concentration of vacant land and dangerous buildings in combination are probably in three or four Council districts. You know, Council District 5 is by large has overwhelming the largest amount of vacant and dangerous buildings and land. But also, I think in the third Council District in certain parts of it, the second and I think portions of -- and the 1st and the 7th are about equal.
I think first and foremost is we want to make sure that the development process is closely linked to community and neighborhood planning processes. 126 5/28/02 - FINANCE - BILL 020275, RES. 020285 We've always said and the Administration is committed to that, you know, the vision of the community and housing and, you know, supermarkets and other types of activities, we need kind of like a baseline plan. And in some neighborhoods there are already existing plans in place. And so then it's just a question of putting in place and making sure resources can move those. Those are primarily neighborhoods which have historically been serviced by Community Development Corporations, so it's a question of, you know, the Planning Commission can talk in detail about that planning process. But in other neighborhoods, it's going to be creating in a planning process and census around from the ground up, so to speak. And there we play a support role and maybe a much more hands-on role.
Well, I mean, I can appreciate all that. But tell me over the course of the next year, year and a half, the first three places in the City that you expect to see development activity.
For example, some major development activity that will probably come to 127 5/28/02 - FINANCE - BILL 020275, RES. 020285 fruition would be activity because of the resources of Hope VI dollars like Mill Creek, the redesign and modernization of Tasker Homes. That's going to have some significant --
But they're also bringing in some private resources and financing to go support that. We also are looking -- have expressions of interests from CDCs in the east of Broad area around housing projects, some of which are funded out of the CDBG grant. We've also -- the FannieMae Corporation is partnering with the universal communities to be a major driver redevelopment in southwest Center City. They are going to be playing a major role to bring private resources to play around a redevelopment agenda and a very targeted area over the next five years. Those are just some of the things that are just coming 128 5/28/02 - FINANCE - BILL 020275, RES. 020285 to mind on like large-scale redevelopment. But I think what is important is how do we also do our preservation work in neighborhoods. For example, one of the things that is very important and one of the reasons why we are expanding our homeownership rehab program and want to reach out and engage the contractor community is that in neighborhoods where there is some vacancy but no CDC, there will now be a resource to get, you know, small contractors or for-profit contractors to do, you know, moderate rehab where you don't need large subsidies or new construction. Again, the funding of programs around homeownership repair and improvement programs, we consider that -- and those will be in areas, you know, we've already funded some work in West Oak Lane. We're going to see how that's moving. How do we replicate those kind of leverage resources, grant loan programs using a variety of resources.
All right, I'd like to come back do that. When will the demolition and encapsulation work begin? 129 5/28/02 - FINANCE - BILL 020275, RES. 020285
Well, as you know, we've been meeting with a variety of District Councilpeople to figure out the target areas. Then once we've done that, we deploy -- and there's a schedule, a preliminary schedule that was included in the program statement by Council District which was our estimation critical to --
, it's the last page, are you talking about? Attachment 5?
That was with stabilization. There's also one, I think Attachment 3, yeah, attachment 3 is the residential demolition schedule. 130 5/28/02 - FINANCE - BILL 020275, RES. 020285 Critical to that, which is not reflected in that is the time periods for review and approval by the District Councilperson. We've already started some field inspections. We've meeting with Councilpersons around identifying their priority areas for Year 1. You know, we've had conversations with your staff, I believe, as well as other staff persons, so that's ongoing work.
So you're anticipating the first bid package... Are you expecting the first bid package to be opened on August 21, '02?
I understand that. I just want to make sure, am I reading the right document.
Those were projected dates. What's not reflected and what I've asked the staff people to do is to incorporate a timeline that indicates the amount of time for Council review. The process of reviewing and selecting properties and getting that sign-off 131 5/28/02 - FINANCE - BILL 020275, RES. 020285 has taken longer than we initially anticipated.
Yes, we would need to update. But, again, there are variables that are not in our direct control and that's the process of review by the District Councilperson and their sign-off and any identification of the priority areas as required by the legislation.
Well, have you provided the list of the actual properties either for demolitions or encapsulation?
As you know, what we're doing is we meet with each District Councilperson or their staff.
We begin to identify what's going to be the target priority area.
Once that's done, then we deploy inspectors to go out and reinspect because things aren't stagnant, that new inspection is critical. Then we develop a list of properties based on that inspection. We sit down with the 132 5/28/02 - FINANCE - BILL 020275, RES. 020285 District Councilperson and other members of government and kind of vet that list and then come up with what makes a reasonable bid package. I mean, that's a quick and dirty kind of interim steps.
I've got that. Let me make sure I understand the longer answer to my question.
Once we agreed on the property address, we create the bid package and submit the property addresses along with -- at the same time, since we're looking at the neighborhood, we begin to identify are there any other acquisition needs, what's going to be stabilized, and then transmit to the Councilperson an approval form that outlines that and also shares it with all other agencies.
Have you provided any list of properties for demolition or encapsulization?
Just in what call the prototype area. We've begun to look at about -- I don't know the exact number, but identified properties in the 5th Councilmatic District and 133 5/28/02 - FINANCE - BILL 020275, RES. 020285 just received the sign-off from the District Councilperson, I think about a month ago. And so we're in the process of putting that bid package together and it's our objective to actually advertise the bid, I believe, the first week of June.
And in other Council areas we started doing the inspections, so forth and so on.
Just so I understand and kind of a recap, the only list that you put together is a list of properties for demolition in the 5th District; is that correct?
Right. And the prototype package where we've gotten the approval of City Council, until that's signed off on, it's not, you know, final. We've also begun to have community meetings reviewing which properties we were recommending, talking about why, showing pictures.
Again, we advertise next 134 5/28/02 - FINANCE - BILL 020275, RES. 020285 week. I believe we're allocating about three or four weeks before for a response from the contracting community. Then it takes another three or four weeks to review that. I mean, there's established procurement process.
Well, that again, I know what we've been doing. And correct me. I believe we sat down, began to identify our target area.